With global currencies locked in their usual tug of war, and exchange rates responding to all sorts of stimuli, things can get complicated for holidaymakers. When travelling abroad, there are two currencies to consider – the one back home, and the when you’re actually spending in.
So what’s the best way of getting a good deal on your holiday money abroad? The Xpress Money team investigates.
Decide where you want to go:
This is the first, and perhaps most important step. Figure out your destination in advance if you can, so you can track the movements of its currency against your own. Impulse travellers and last-minute decision-makers have to accept the going exchange rate at the time, but forward planners can pick more favourable terms.
Decide when to buy:
There’s no need to subject yourself to the exchange rate on the day you’re travelling. Instead, you can give yourself the option of choosing a favourable exchange rate and buying when the time is right – even weeks or months in advance of your holiday.
Investigate your currency:
Don’t fall foul of currency wastage caused by arcane rules. While the world’s main currencies are fairly easy to trade, some foreign currencies have their quirks. For instance, did you know that the Moroccan Dirham cannot be exchanged internationally? Cuba, meanwhile, has two currencies – one for tourists and one for locals. And several countries – including Lebanon and Cambodia – use US dollars as a second currency. But if you’re heading to Myanmar in Burma for some sightseeing, remember that the dollars you carry need to be absolutely pristine, with zero rips or folds, to be usable.
Always spend in local currency when abroad:
Every time you whip out your debit card from back home to pay for a packet of gum, your financial provider is charging you a forex fee. You’re also charged each time you withdraw money at an ATM. So the best thing to do is to buy all the local currency you need in one go, and spend that.
Beware of Dynamic Currency Conversion:
Sometimes, merchants offer you a choice of local versus home currencies when paying at a Point of Sale. There is some evidence1 that choosing to pay using your home currency activates Dynamic Currency Conversion rates – where a foreign bank is making calculations on the fly- that are around 5% over market. Always pay in local currency if you can.
Use a prepaid travel card:
If you want the best deal on your dollars overseas, it might be worth investigating built-to-purpose prepaid travel cards. Some providers offer purpose-specific travel cards that can be preloaded with a selection of currencies, and offer competitive fees and rates. Some even offer zero transaction fees when used at Points of Sales, or online.
So there you have it. With these top tips, your holiday budget will stretch just that bit farther. Safe travels!
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